Social impact startup founders face the usual startup challenges plus the need to balance financial viability with delivering real social impact. Ernie Ting of CivImpact Labs explains why these founders benefit from a peer group that shares their perspective.
Startups that aim to tackle important and extraordinarily difficult social problems are inspiring in concept. However, social impact startups require founders to craft and walk a special tightrope to success. On top of the myriad challenges that all startups face, these startups must balance delivering a substantial social impact with generating profits or creating wealth. They may deliberately target ill-defined markets or serve disadvantaged populations. And as a result, social impact startup founders face different challenges than more conventional startup founders and have fewer models to emulate.
Nonetheless, using the focus, innovation and drive of entrepreneurs to address the big issues that afflict society, the economy, and the environment is one of the most promising ways to uncover answers and make breakthrough progress.
At a Founders Network event on August 25, 2022, social impact startup founders had the opportunity to come together with FN members to discuss the challenges they face. The event provided a forum for dual-purpose founders to share insights and helpful experiences, make introductions, and offer information resources.
To learn more about social impact challenges, see if you qualify for membership or watch the recording of the August 25, 2022 event.
“The idea is to create a smaller group for people who share the same perspective,” Ting says. “In our case, the reason we exist is to have a social impact. You face different challenges. The point is to create a subset of the entire Founders Network community where people who can identify with those challenges can provide each other with support and resources.”
This initial event was open to FN members and social impact founders in the broader startup ecosystem. It is part of an ongoing Founders Network initiative to better connect startup founders in particular sectors. During August 2022, these sector events were open to the public to give outside startup founders a taste of the Founders Network experience.
“One of the values of having something like Founders Network is to provide each other with moral support through what can be a very difficult journey,” Ting says.
Here’s a peek at the social impact startup sector and the challenges these founders face.
A growing market
Social impact startups strive to consciously, systematically, and sustainably serve or solve the needs of local or global communities. These companies take on problems such as education, access to clean water, conservation of natural resources, healthcare in underserved populations, and more. For example, Ting’s company, CivImpact Labs, is focused on launching news, communication, and social applications that better inform the public, reduce political polarization, and positively impact society and democracy.
The Global Impact Investing Network’s 2024 market sizing estimates that more than 3,900 organizations manage $1.571 trillion in impact investing assets worldwide, representing 21% compound annual growth since 2019.
Vying for funding
Social impact startup founders face many of the same challenges as other founders. According to one 2021 report, their top concerns were: finding funding, business planning, finding mentors, business strategy, marketing, sales, financial literacy, and digital literacy.
However, while finding funding tends to be the top concern for most founders, social impact startup founders receive less funding than founders in other sectors. Even with the growth above, impact investing is still a small share of the global financial market, which is part of why funding is hard to find for these founders.
Balancing act
While one report found that many early-stage entrepreneurs in the U.S. cite a desire to make a positive impact as a reason for starting a business, true social impact startups differ greatly from traditional startups. That’s because these startups must always balance what’s good for the financial viability of their venture with achieving the social impact they are focused on.
“The reason we exist is to create social impact,” Ting says. “We wouldn’t do these things if we didn’t have social impact as the goal. Some founders can’t identify with that: taking on a large problem for a questionable financial gain.”
To learn more about social impact challenges, see if you qualify for membership or watch the recording of the August 25, 2022 event.
Frequently asked questions
What are the top challenges for social impact startup founders?
One report in the post lists finding funding, business planning, finding mentors, business strategy, marketing, sales, financial literacy and digital literacy. Funding is the top concern, and these founders receive less funding than founders in other sectors.
How much funding goes to impact investing?
Impact investing is a small share of the global financial market. The Global Impact Investing Network’s 2024 market sizing estimates $1.571 trillion in impact investing assets under management worldwide.
What is a social impact startup?
A company that strives to consciously, systematically and sustainably serve or solve the needs of local or global communities, on problems like education, clean water, conservation and healthcare in underserved populations.
What is CivImpact Labs?
Ernie Ting's company, focused on launching news, communication and social applications that better inform the public, reduce political polarization and positively impact society and democracy.
